This blog aims to provide the latest news and comment relating to Peak Oil, and related issues such as supply of other fossil fuels, renewable energy, sustainability and finance. Global issues are covered from a UK perspective.

Wednesday, 10 April 2013

While most people interested in energy in the UK (myself included) have been focused on our gas supply issues, with the unseasonably cold March, events have been unfolding in other countries that may be a cause for concern.

During past price rises in the price of energy and problems in global supply, poorer countries have often acted as 'canaries in the mine', as their relative lack of financial muscle exposes them to the risk of shortages much sooner than rich countries. This is not surprising, given that our energy markets impose 'rationing by price' when demand rises, supply falls, or both happen at once.

Over the past week, there are three stories that have come to my attention, in Jordan, Thailand and Egypt:

The resource-poor kingdom, which imports 97 percent of its energy, has in the past two years seen the annual cost of those purchases soar above $5 billion (3.3 billion pounds) - equivalent to about 15 percent of its gross domestic product - after supplies of cheap Egyptian gas were disrupted by sabotage of a pipeline to Jordan.Dependent now on costly diesel and fuel oil, Jordan is considering wider electricity rationing and is preparing a hike in electricity prices in June, a politically fraught move in a country which saw street protests last year over fuel subsidy cuts imposed as a condition for a $2 billion IMF loan."Energy is the Achilles heel of the Jordanian economy, it's a huge vulnerability for Jordan...the biggest drain on the economy," Nemat Shafik, deputy head of the International Monetary Fund, said during a visit to Jordan last month.

Interestingly, it is provoking some positive responses, such as improvements in energy efficiency and plans to build large solar farms, but sadly they are still focusing on fossil fuels, for example: pipelines to import crude oil and plans to develop shale oil and gas. Jordan is actually in a similar situation to the UK, only worse, as it seems to have been getting most of its gas through one major import route, while the UK has several. But the lesson is there - if you depend on imports, then disruption to them can turn into a serious problem very quickly.

Thailand

Another Reuters story covers the trouble in Thailand, where technical problems at gas fields in Myanmar have resulted in a shutdown of gas supplies right at the peak of electricity demand.

Government electricity-saving plans - including agreements with factories such as a Thai unit of Toyota Motor Corp to stop operations on April 5 - may prevent blackouts in the short term but point to the potential long-term economic impact.The supply crunch also highlights the difficulties in securing alternatives. Liquefied natural gas is much more expensive, while cheaper coal faces strong opposition after problems caused by pollution in the early 1990s at a coal-fired power plant.

As in Jordan, they are considering other options, but not many of them are renewable:

To strengthen electricity security, Thailand aims to develop an ASEAN power grid to link transmission systems among Southeast Asian countries, said Pongdith Potchana, deputy governor at the state-run Electricity Generating Authority of Thailand.Thailand has already signed deals to buy up to 7,000 megawatts of power from Laos and is aiming to buy either hydro or coal-fired power from Cambodia and Myanmar, he added.But for real security, Thailand needs to double its electricity generation capacity to 70,000 MW by 2030 and the most cost-effective way to do that - and the most controversial - is through coal-fired plants.Imported coal provides power at 2.94 baht per kilowatt hour, cheaper than 3.96 baht for natural gas, as well as the 3.00-5.20 baht for biomass and wind power and the 12.50 baht for solar energy, according to government data....Another way the government can tackle the looming gas shortage is to dampen demand by allowing prices to rise. It has said it wants to raise prices of cooking gas, or liquefied petrolem gas (LPG) and natural gas for vehicles to reflect costs.

The Egyptian government has announced that it will close the Cairo International Airport beginning on June 1 from 1:30 am to 5:30 am in order to save electricity; however, one lane at the airport will remain in operation to receiving incoming flights.While the airport has not been hit by the power outages that have affected the rest of the city because of back-up generators, the energy situation in Egypt continues to deteriorate. Over 95% of the population has access to electricity, but the rising demand has crippled the already battered economy. Previously, the government announced that it would cut power from shops at 9 pm each night, but business owners protested against the change since many places depend on the active Egyptian night time to conduct operations.

In some ways this is worse than a specific technical or political problem restricting energy supplies, as there are no quick solutions to increase supply. Of course, this is also the situation for the UK in the next few years, as we face an ageing energy infrastructure here too, with power stations closing and not many new ones opening that don't rely on imported gas...